Download in the matter of the securities legislation of manitoba and ont ario

Septembe)
~2011
IN THE MATTER OF
THE SECURITIES LEGISL ATION OF
MANITOBA AND ONT ARIO
AND
IN THE MATTER OF
T HE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
AND
IN THE MATT ER OF
l.G. INVESTMENT MANAGEMENT, LTD.
(the F iler)
AND
IN THE MATTER OF
THE REPRESENTATIVE DEALERS
(as defined below)
DECISION
Backg round
The securities regulatory authority or regulator in each of Manitoba and Ontario (Decision
Maker) has received an application from the Filer for a decision under the securities legislation
of Manitoba and Ontario (Legislation) for exemptive relief to permit a Dealer (as defined
below), including the Representative Dealers (as defined below), to send or deliver the most
recently filed fund facts document (Fund Facts) to satisfy the requirement contained in the
Legislation that obligates a Dealer to send or deliver, within a specified time period and in a
specified manner, the prospectus, and any amendment to the prospectus (Delivery
Requ ir ement), in respect of an order or subscription to ptu·chase securities of a Fund (as defined
below) (the E xemption Sought).
Under the Process for Exernptive Relief Applications m Multiple Jurisdictions (for a dual
application):
(a)
The Manitoba Securities Commission is the principal regulator for this
application;
(b)
the Filer has provided notice that subsection 4.7(1) of MLLltilateral Instrument 11102 Passport System (Ml 11-102) is intended to be relied upon in British
Columbia, Alberta, Saskatchewan, Quebec, New Brunswick, Nova Scotia, Prince
Edward Island, Newfoundland and Labrador, the Northwest Territories, Nunavut
and Yukon (together with Ontario and Manitoba, the Jurisd ictions); and
(c)
the decision is the decision of the principal regulator and evidences the decision
of the securities regulatory authority or regulator in Ontario.
Interpretation
Terms defined in National Instrument 14-10 I Dejlnitions, and MT 11-1 02 have the same meaning
if used in this decision, unless otherwise defined.
Right of W ithdrawal means the right, given to a purchaser under the Legislation, to
withdraw fro m a purchase order for a sec urity of a mutual fund if the dealer from which
the purchaser purchases the secu rity receives written notice evidencing the intention of
the purchaser not to be bound by the purchase order within two days of receipt of the
latest prospectus sent or delivered in compUance with the Delivery Requirement. ln
Quebec, this right is called a right lo rescind. Collectively, these rights are referred to as
the Rights of Withdrawal.
Right of Rescission means the right of action, under the Legislation, for rescission or
damages against a dealer, for failure of the dealer to send or deliver the prospectus to a
purchaser of a security to whom a prospectus was required to be sent or delivered , but
was not sent or delivered in compliance with the Delivery Requirement. In Quebec, such
a purchaser may apply to have the transaction rescinded or the price revised, at lhe
purchaser's option, without prejudice to the purchaser's claim for damages. Co ll ectively,
these rights are referred to as the Rights of Rescission.
Representations
This decision is based on the fo llowing facts represented by tbe Filer:
1.
The Fi ler is registered as an investment fund manager in one or more of the Jurisdictions.
2.
The head office of the Filer is located in Manitoba.
3.
Each of the existing mutual funds managed by the Fi ler to which the Exemption Sought
relates is offered for sale on a continuous basis in the Jurisdictions (each, a Current
F und). Any future mutual funds managed by the Filer to which the Exemption Sought
will relate (each, a F utu re F und) will be offered for sale on a continuous basis in one or
more Jmisdictions. Each Current Fund and each Future Fund are hereinafter referred to
individually as a F und and collectively as the F unds.
4.
Each Fund is, or will be, offered for sale pursuant to a simplified prospectus governed by
National Instrument 81- 101 Mutual Fund Prospectus Disclosure (NI 81-101) (each, a
Pros pectus).
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5.
Each Fund is, or will be, a reporting issuer in one or more of the Jurisdictions.
6.
Securities of the Cu1Tent Funds are distributed only through Investors Group Financial
Services Inc. and/or Investors Group Securities Inc. (the Representative Dea lers).
7.
Securit ies of the Future Funds will be distributed through dealers wh ich may or may not
be affiliated with the Filer (individually, each dealer that distributes securities of a Future
Ftmd managed by the Filer or each Representative Dealer, is a Dea ler and collecti vely,
the Dea lers).
8.
Each Dealer is, or will be, registered as a dealer in one or more of the Jurisdictions. Most
of the Dealers are. or will be, members of ei ther the Investment Industry Regulatory
Organization of Canada or the Mutual Fund Dealers Association of Canada and , in
Quebec, members of the Chambre de la securite fina nciere, or their successors.
9.
The Filer and the Funds are not in default of securities legislation in any of the
Jurisdictions.
10.
Pursuant to the Legislation, each Dealer has an obligation to send or deliver the
Prospectus to a purchaser of a security of a Fund within two days of their purchase of the
security.
11.
Pursuant to the Canadian Securities Administrators' (the CSA) point of sale disclosure
project for mutual funds (the Proj ect), the CSA has determined that it is desirable to
create a summary disclosure document called the Fund Facts.
12.
CSA Staff Notice 81-319 Status Report on the Implementation of Point of Safe
Disclosure for Mutual Funds, outlines the CS A's decision to implement the point of sale
disclosure framework in stages.
13.
Stage l of the Project became effective on January 1, 2011 by amending NT 81-101 and
related instruments mandating a mutual fund to prepare and file a Fund Facts on the
System fo r Electronic Document Analysis and Retrieval (SEDAR ) fo r each relevant class
or series of the mutual fund, and having the Fund Facts posted to the mutual fund ' s or its
manager's website and delivered to any person upon request, al no cost.
14.
Stage 2 of the Project proposes to al low delivery of the Fund Facts to satisfy the current
requirement under the Legislation to send or deliver a prospectus within two days of
purchasing a mutual fund .
15.
The Filer has determined that it would be desirable to apply fo r relief consistent with the
proposed requirements in Stage 2 of the Project prior to the implementation of the Stage
2 amendments and, accordingly, requires an exemption to satisfy the Delivery
Requirement, as contemplated by CSA Staff Notice 81-321 Early Use of Fund Facts to
Satisfy Prospectus Delivety Requirements.
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16.
Investors will be able to request a copy of the Prospectus, at no cost, by contacting the
Filer or applicable Dealer and will continue to be able to access the Prospectus on the
SEDAR website and on the website of the Filer or the FLU1d (as applicable).
Decision
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation
for the Decision Maker to make the decision.
The decision of the Decision Makers under the Legislation is that the Exemption Sought is
granted provided that:
I. Prior to providing the Fund Facts to a Dealer to send or deliver in lieu of the Prospectus, the
Filer:
(a)
files a Fund Facts for the applicable class or series of securities of the Fund in
accordance with the requirements of Nl 81-lOJ and in the format prescribed by
Form 81-101 F3 Contents of Fund Facts Document;
(b)
discloses in the Fund Facts for a specific class or series
(c)
(i)
if management fees, administration fees and/or other fees are payable
directly by investors to the Filer in respect of holding securities of that
class or series of the mutual fund, the existence of such fees and, in any
Fund Facts fi led after the date of this decision and no later than the next
renewal of the Prospectus for such class or series, the maximum
management fees, administration fees and/or other fees that may be
charged by the Filer to the investor; and
(ii)
any requirement for an investor to participate in a fee-based arrangement
with their dealer in order to be eligible to purchase the particular class or
series of the mutual fund; and
renews or amends the Prospectus that offers such class or series of the Fund to
specify under Item 3 of Part A of Form 81-10 lF l Contents o/Simplifted
Prospectus that the Fund Facts is incorporated by reference into the Prospectus.
2. A Fund Facts that is being sent or delivered wil l not be attached to, or bound with another
Fund Facts unless each Fund Facts:
(a)
relates to securities of a Fund that have been purchased by the investor; and
(b)
is being sent or delivered pursuant to this decision.
3. The Filer, and any Dealer relying on the ability to send or deliver Fund Facts in lieu of the
Prospectus for Funds managed by the Filer, grants to an investor purchasing the securities of
a Fund a right equivalent to the Rights of Withdrawal upon the sending or delivery of the
Fund Facts. The Rights of Withdrawal and the Rights of Rescission will no longer apply if
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the Fund Facts is sent or delivered to an investor in accordance with the time period and in
the manner specified for the Prospectus under the Delivery Requirement.
4. Prior to a Dealer relying on the ability to send or deliver Fund Facts in lieu of the Prospectus
for Funds managed by the Filer, the Filer or an agent of the Fi ler provides to the Dealer:
(a)
a copy of this decision;
(b)
a disclosure statement informing the Dealer of the implications of this decision;
and
(c)
an acknowledgment of the matters referred to in paragraph 5 below (the
Ack110wledgm ent), to be signed and returned by the Dealer to the Fi ler or its
agent.
5. Prior to a Dealer relying on the ability to send or deliver Fund Facts in lieu of the Prospectus
for Funds managed by the Filer, the Dealer returns the Acknowledgement to the Filer or an
agent of the Filer:
(a) acknowledging receipt of a copy of thjs decision ;
(b) agreeing to send or deliver the Fund Facts to an investor in lieu of the Prospectus;
(c) confirming that the Dealer will provide a right equivalent to the Rights of
Withdrawal attaching to the sending or delivery of the Fund Facts;
(d) acknowledging that, in the event a Fund Facts is not sent or delivered in
accordance with this decision, a Prospectus must be sent or delivered and the
Rights of Rescission wi ll continue to apply to the failure to send or deliver the
Prospectus;
(e) undertaking that the Dealer will only attach or bind one Fund Facts with another
Fund Facts if both are being sent or de\ i vered at the same time to an investor
pursuant to this decision; and
(f) confirm ing that the Dealer has in place written policies and procedures to ensure
that there is compl iance with the conditions of the decision.
6. Investors in the Funds managed by the Filer receive notice in a document other than the Fund
Facts, at or before the time they receive the Fund Facts, indicating that they will have
equivalent rights and protections otherwise applicable under securities law in their
jurisdiction for the sending or delivery of the Fund Facts, which includes wording
substantially simi lar to the following:
The Fund Facts for the securities you purchase is being sent or delivered
to you instead of the simplified prospectus. You will continue to have the
equivalent rights and protections otherwise applicable under securities law
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as if you were sent or delivered the simplified prospectus. Depending on
your province or territory, you may have the right to:
•
withdraw from an agreement to buy securities of mutual funds
within two business days after you receive a fund facts document,
or
•
cancel your purchase within 48 hours
confim1ation of the purchase.
after you
receive
For more in formation, see the securities law of yom province or territory
or ask a lawyer.
7. The Filer will cause the Funds managed by it to honour any request made by an investor to
exercise a right equivalent to the Rights of Withdrawal in respect of an agreement to
purchase securities of a Fund managed by the Filer that a Dealer fails to honour, provided
such request is made in respect of a validly exercised right.
8. The Filer or its agent keeps records of the Dealers that have ret11rned to the Filer or its agent
signed copies of the Acknowledgement and, on a confidential basis, the FiJer or its agent
provides the principal regulator for its Funds on a quarterly basis beginning 60 days after the
date upon which the Exemption Sought is first re lied upon by the Filer and the Funds it
manages, and upon request, at the discretion of the Filer, either (i) a current list of all such
Dealers, or (ii) an update to the list of such Dealers or confirmation that there has been no
change to such list.
9. The Exemption Sought terminates the earlier of (a) 6 months from any notice by the CSA
that the Exemption Sought may no longer be relied upon; and (b) the coming into force of
any legislation or rule relating to the sendi ng or delivery of the Fund Facts to satisfy the
Delivery Requ irement.
Deputy Director - Legal
The Manitoba Securities Commission
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